Abstract
This study presents a conceptual framework based on the new product diffusion and demand theory models. The proposed framework was created a probability of demand function, and the optimal price for a patent protected new product was determined. As a new product diffuses through the market. The rate at which information regarding a new product diffuses through the market varies over time. To analyze this problem in detail, this study defines the probability of demand function. Using this demand probability function and the differential equation for the diffusion of new product information over time, this study presents a concrete mathematical model for addressing the question “How can a manufacturer influence new product information diffusion and profits by manipulating the sales price”. This study also characterize the optimal price and analyzes the sensitivity of its dependence on the equation parameters.
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